RRL – Credit Suisse rates the stock as Outperform

Regis Resources will acquire the 30% interest belonging to IGO ((IGO)) in Tropicana gold mine for $903m. The deal would be funded by equity and debt. The main risk this deal is the 70% owner, AngloGold Ashanti, imposing its last right of refusal to match the offer.

In the event this occurs Regis Resources will receive a $25m break fee from IGO if exercised prior to a capital raising or $40m post a capital raising.

Credit Suisse believes Tropicana will enhance the portfolio in many respects although the transaction is dilutive, factoring in the equity raising at a -46% discount to prior value. Outperform retained. Target is reduced to $4.40 from $5.05.

Sector: Materials.

 

Target price is $4.40.Current Price is $3.22. Difference: $1.18 – (brackets indicate current price is over target). If RRL meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges – negative figures indicate an expected loss).

 

 

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